At the bottom of our garden, in what we have aspirationally named “the meadow”, there is a small patch of the wildflower honesty (Lunaria annua) that must have arrived on the wind.
For the less horticulturally minded of the Funds Europe readership, honesty is resplendent with bright, blousy, purple blooms that attract all manner of pollinators. However, once its reproductive job is done, these are magically transformed and, almost overnight, replaced by tissue-paper-thin seed pods that resemble a pale moon and flutter in the breeze.
Aside from prompting me to start belting out Billy Joel’s 1978 hit of the same name (and surely delighting our neighbours), the honesty at the bottom of the meadow makes me quite philosophical. Rather than hiding the seeds in a juicy berry or fruit, the plant is brazen in its attempts to grow its reach and, if they avoid ending up in a vase on our mantlepiece, these capsules of the future will spread far and wide.
As with most things in my life, this analogy brings me back to fund management, where honesty is “hardly ever heard”, as Billy Joel says. Please don’t think I am calling the industry dishonest – far from it. I’m sure there are very few criminal minds out there plotting their next Ucits-compliant deceit fund. But there is a distinct lack of honesty in the industry about the challenges it collectively faces – and the struggles it is going to have to overcome to even meet them.
The most obvious one is sustainability. In 2007, when I was writing for the now defunct Global Pensions, I asked the UK’s largest fund managers about their approach to socially responsible investment (SRI) and sustainability, which (apart from a few hippies like me) was nowhere near ‘on trend’.
Of the managers who responded to my questions, several said they had either just one dedicated fund or strategy, thank you, with the remainder suggesting they had rather more important things to focus on and, anyway, sustainability wasn’t really their problem. Imagine my surprise, therefore, when many of these companies now tell me how their sustainability approach has been embedded in their processes for decades!
I get it. We live and learn. I also didn’t keep the emails to prove otherwise. The fact of the matter is there are plenty of companies – fund managers, custodians and many other service providers – who have arrived so late to the sustainability party that all the good beer has gone and there’s only own-brand lager at the bottom of the cooler. They are finding that it’s not easy. You can’t just create a sustainability policy, tell your fund managers about it, create a marketing programme and carry on as normal. This is going to be a hard slog towards change and there are going to be some spectacular blow-ups along the way.
But investors deserve to know this – they deserve to know the journey those who are allocating their capital are on. You never know, they may be treading the same path too, and would empathise – or even help shape a combined future.
If fund managers get this right and are open about the challenges they face, there are rich rewards for them. In many parts of Asia, honesty is known as the money plant, as its seed pods also look like silvery coins. In Northern Europe and Benelux, however, where sustainability is already deeply embedded by even the smallest investors, the name evokes the bribe made to Judas Iscariot’s honour some 2,000 years or so ago – and we all know how his approach to honesty turned out.
By Liz Pfeuti
© 2021 funds europe
